Insurance sector warns of massive 2023 rate hike
(CNS): Homeowners can expect another significant hike in their bills next year as the local insurance industry is warning that property insurance premiums will increase significantly, with some people seeing hikes of as much as 30%. As inflation bites on grocery and utility bills and interest rates push mortgages to their highest for decades, this latest news is likely to ensure that 2023 is going to be another difficult year.
The Cayman Islands Insurance Association (CIIA) issued a public notification on Wednesday warning people to expect their 2023 property insurance premium rates to increase by anywhere from 15% to 30%, depending on the type of construction, protections, property location and elevation of the insured property.
The local association said that while the Cayman Islands has been fortunate to avoid any major hurricane losses since Hurricane Ivan in 2004, this country falls into the same reinsurance pool bracket as the wider Caribbean and faces similar risks and blamed factors, such as inflation, supply chain problems and climate change, for the increase in rates.
“The market is requiring a necessary increase in premium rates,” the CIIA said. “Pricing models have been updated to take into account various factors such as climate change and the increasing cost of secondary non catastrophe perils.” That includes events other than hurricanes, earthquakes or tsunamis, such as storm surges, that might follow a specific weather event or even a fire caused by an earthquake.
Another issue driving up prices is that reinsurers are providing less insurance, so the cost of the available reinsurance is escalating. “Reinsurance is vital to the local insurance market,” the CIIA noted.
The impact of inflation is even more prevalent in the Caribbean due to supply chain complexities and the cost of transport. The association pointed out that as inflation is impacting property values, the cost to settle claims will also increase. “This will result in insurance rates being readjusted upwards to allow insurers the ability to continue to pay for future claims,” the industry body warned.
With the warning issued, the association advised policyholders to reach out to their own insurance representatives with questions they may have about premiums.
The 2021 census found that 56% of households in Cayman had structural insurance. But if the number of homes without insurance increases as a result of the price hike, ultimately, it will be the government that will pick up the tab for Caymanians who cannot afford to fix up their homes after a damaging storm.
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Insurance, banks & governments. Always looking for a way to take more money out of your pocket.
Yep…good example is the raise our MP’s gave themselves during while people of the country were going through pandemic economic downturn.
Anyone seen or heard from Chris Saunders since the General Elections on this? Cost of insurance was in his Top 3 things to tackle…..used words like no one having “testicular fortitude” to take these Companies on…….
“Verbal diarrhea” comes to mind.
Think Chris discovered that he was one of those lacking said fortitude.
The wise man built his house upon the bluff.
Many year’s ago I paid off my mortgage and all other debts because I predicted that there would be an economic downturn coming. I am now fully self-insured with cash. My current financial position was only possible because of many year’s of sacrifice and financial discipline. I would like to encourage everyone to exercise financial discipline and to make the sacrifices now that would result in financial freedom later.
Smug and stupid (the grocer’s apostrophe is the clue). A terrible combination.
I wonder how many readers understood your reference re the apostrophe. Nobody seems to worry about this anymore…not just on CNS and not just in Cayman. It’s rather sad.
How sad your life must be.
The article is a very good warning but might not go far enough to spell it out for those not able to connect the dots. If you do connect the dots, the quite ominous message is very clear:
The Cayman Islands Insurance Association advises people to expect their property insurance premium rates to increase by anywhere from 15% to 30%. Note the word “rates”, meaning the factor the insurers use to calculate your premium: the rate is multiplied by the estimated cost to rebuild your home and that product is your base premium. On top of this, you will very likely need to increase the amount of coverage to allow for the inflation-induced increase in the cost to rebuild. Thus, homeowner insurance premiums will be hit with the quite costly double whammy of an increased rate, plus having to increase the amount of coverage to which that increased rate applies.
This could lead to a very dire situation for homeowners barely able to afford to service their mortgage and put food on their tables. A universal condition to all mortgage loans in the Cayman Islands is maintaining adequate insurance coverage. An increase in insurance premiums may be the straw that breaks the camel’s back for already cash-strapped households.
In addition, an increased insurance bill will tend to exacerbate the emerging housing crisis as fewer people will be able to qualify for a home loan, while at the same time we can expect rents to rise to cover the increased insurance cost. Inflation and increased insurance rates can also be expected to dampen development of new rental properties.
NOW is the time for PACT to rise to the occasion and address the issue before it become a major mess.
Note: The CIAA advisory can be found here>>> https://ciia.ky/2022/11/property-rate-increases-in-the-cayman-islands-in-2023/
I just built my house to a high specification over and above code. So in the event of a major hurricane there is going to be little damage to it and I will take the risk of self insuring. Why would I want to pay an inflated premium on the full reinstatement value when I know the house is built well. Seems to me the insurance companies are getting the best of both worlds. Receiving the payment of a high premium for a solidly constructed house with little or no risk of paying out. I would recommend the Govt. look into this scam.
You can choose to insure for fire and theft without hurricane cover and pay a reduced premium.
If you do not have a mortgage, then yes.
It’s double dipping. The cost of the rebuild goes up so you premiums go up that’s the inflationary increase. For the insurance companies to then add an additional percentage to premium is profiteering.
Insurance companies have to buy reinsurance to protect everyone’s policies in the event of a catastrophe. if they don’t have reinsurance then it is unlikely that people will be paid out properly. Unfortunately there are very few reinsurance companies willing to work with the Caribbean sector currently and their rates have rush astronomically due to major losses in the region over the past 5 years or so.
The article is not clear if that’s what it means. I took it to mean a homeowner’s insurance, for the same house, is likely to go up 15-30% next year. Sadly, this makes sense as our rebuild costs have gone up similarly, if not more. If you’re right and they are putting rates up 30%, on top of you having to insure a higher amount to rebuild then yeah you have a point.
Insurance here is a a total SCAM.
Better to self insure.
What a racket !
Sure, if I were wealthy, self-insurance would be wonderful.
Insurance is like betting against yourself and hoping you lose.
Insurance in the Cayman Islands is like betting against yourself, hoping you lose, and paying extra for someone to also bet against you.
I own a small home with some property. My premiums are already barely affordable. I don’t know where the extra 15-30% is going to come from, I truly don’t.
People around me count on government bailing them out. Here on the Brac, after Hurricane Paloma, several benevolent families in Grand Cayman donated money for our recovery, and those monies were administered through the government, as was appropriate. My insurance worked for me.
I suppose that if we cannot afford the premiums, we will be forced to be “self-insured”, which in this case would be a euphemism for “out of luck”.
Keep the faith.
don’t worry, no-plan-pact will just write some more checks for locals….
Not true! You try living on $1,000 a month pension – no handouts or assistance from government. Use correct English, cheques!
Exactly. “Checks” is just horrible. Wherever the Queen is still on the banknotes it is a cheque.
Will it change with the King on banknotes…we are not American and we are not amused.
Both of my neighbors have recently had work done on their homes paid for by the government. And yes, they have good full time jobs, are not unemployed, disabled or retired. They tell me that if you are Caymanian (I am not) then you don’t have to worry about house repairs or even paying for insurance, because the government pays for the upkeep of the house if you are Caymanian.
I’ve seen it with my own eyes. New windows in one, a new roof on the other. While I have spent $20,000 on my home this year. Handout capital of the world.
Would like to know who they know!
I would as well. Apparently, I do not possess the level of ‘social iron’ to make that happen for myself.
If a person is required to sacrifice their integrity to do so, then I will never be ‘aboard’.
LOL … and haven’t ‘sunk’ yet.
I’ll take “Things That Didn’t Happen” for $100, Alex…
the biggest expense in home ownership and strata fees is insurance.
solve this problem and you will sole a lot of issues regarding housing
The insurance companies always blame rate hikes on natural disaster payouts as they are in a reinsurance pool yet property insurance in other Caribbean countries are not as high. Ask yourself why.
Inflation has nothing to do with insurance rates! It is a service industry. You are required to insure your house for full replacement cost in the event a disaster takes your house and totally destroys it. Our building code is strong so the likelihood of total destruction is marginal here. So eventhough your house is valued at $500K if you want to sell it, given inflation that same house will cost $1million to build so you are forced to insure for $1million.
The cost of construction combined with rising market rates due to inflation has nothing to do with an insurance payout! We pay more in premiums as the replacement costs rises so in turn the insurance companies are collecting more money!!
If your house is under insured the insurance companies pay out less.
Due to the implementation of IFRS9 several years ago that requires banks to make provisions for losses even if the mortgage is paying as agreed has created more costs to the customer as updated valuations are now required more frequently to confirm the value of the house.
It is a never ending cycle now where the quantity surveyors are getting rich and the people are burdened with every increasing costs to own a home.
Foreclosures are increasing and now many won’t be able to insure their homes as the insurance industry here is not properly regulated. The banks will “force place” the insurance to protect their asset and the customer still has to pay for it one way or another.
This requires serious discussions right now.
Insurance in Cayman is absolutely regulated by CIMA, not to mention the ‘local’ insurers are subsidiaries of overseas parent companies that are also highly regulated and most insurance (local or international) is reinsured by global reinsurers anyway, who again, are highly regulated.
No one is saying this is an ideal situation but not everyone’s home is built to the the same code (reflected in your individual rate), construction costs have increased a huge amount in the last few years meaning rebuild costs are much higher than they were and yes, consequently it is important that you insure for the correct rebuild cost. If you underinsure and don’t pay the premium related to the risk you bring to the common pool why should you be paid out the same as those who did pay the premium related to the risk that they brought to the pool?
Of course the banks want to protect the assets that they have provided a loan on – wouldn’t you?
If you don’t have a mortgage then yes, self-insure and hope for the best.
The cost of living rise sucks but it doesn’t mean that insurers are doing anything wrong.
Almost everything in Cayman is a ridiculous rip off. I estimate we pay 3 times what a comparable risk and value house in Florida would pay for insurance. The biggest rip off here is cell phone service where we pay at least TEN TIMES more than, for example, the UK. Ironically the one thing people complain the most about, CUC, is pretty much the same as everywhere else and less than a lot of places, except the US.
Personally I don’t insure and save the premium. 15 years in I recon we’re well ahead of any likely storm damage. Of course it’s a gamble.
The primary difference is that here, insurance pays for all the damage incurred by a hurricane. In the U.S., hurricane damage is separated from “flood insurance”, and flood insurance is primarily issued by FEMA and is wholly unobtainable for those that live anywhere near the sea.
In that regard, we ROCK.
Hah, lol the average Caymanian knows we will never be able to afford a house…. or retire. Its work and rent until we die babbbyyyyy.
Don’t forget even if you have a big pension pot, $1,000 pm don’t pay the rent now so it certainly won’t be enough when you retire.
nett profits of property insurance companies in 2020 in the cayman islands was 55 million .
roughly 50 % of nett premiums.
So it seems we already pay a double premium, just for the shareholders .
time for government to go into insurance business.
They tried that with CINICO and its a flop
Cinco is still not governmental.
it’s for civil servants and a bucket for uninsurables.
a way for private insurance to only take on healthy people.
Another bunch of thieves in suits!!
Like banks.
The biggest thieves usually wear suits.
Any excuse to raise premiums. This is called “gouging” and the problem is Cayman has no regulators in the industries to addres this abuse. You know, if EVERYONE came together and militantly refused to pay their home (or other, let’s say health) insurance policy unless the rates were kept “usual and customary” the sector(s) would have to bow because of the loss of income.
Same as CIREBA’s rediculous 4% commission on a house sale. If EVERYONE sold their home privately CIREBAs rates would be forced down to compete.
4%?
I think you are wrong on the not paying insurance as the banks would have a real problem with that.
But for CIREBA it is even worse as that is 6% I believe…
I built my house 30 years ago for a hundred thousand dollars.
The rebuild cost is over $500,000.00 now. The premium was $5000.00 per year. I don’t want to see what it will be now. Will probably have to sell my property, because I won’t be able to afford the insurance.
If it gets blown away, you’re going to want $500,000, right? Not $100,000.
So where are you going to live?
I’m holding out for ‘the health insurance groups’ – surely they can easily exceed this.
Gmorning
When u insure your home let it be only that and it’s contents and not include the land value
This will save u a bundle
You use a reinstatement value – which is the cost of a rebuild.
Cayman’s laws are geared to protect business owners and industry, not consumers. Find this out when you file a claim and the adjuster approaches the process like they can invent a number you might accept, rather than the value of sums insured.
Rental laws are only there for the landlords.
Insurance laws are only there for the insurers.
A part of the core issue is that we elect representatives and we elevate them out of our world. They make significant amounts of money over night, get into positions where they meet influential people and broker deals. We ask them to represent us when they no longer become us. The laws will never change because our representatives become the industry and the owners.
But there is something we can, Captive insurance, an insurance company fully owned by its insured. The businesses do this all the time for themselves, so why can neighborhoods, communities and stratas start to do something for themselves. For too long the betterment of ‘the shareholders’ supersedes the betterment of the customer.
You are free to work for your shareholders but it’s time I have the option to handle my own situation and use alternatives. If insurance companies didn’t fight tooth and nail to pay out for claims I wouldn’t be this upset but the memory of the inspector coming into my house after Ivan and tell my parents this isn’t covered and that isn’t covered has put a bad taste in my mouth.
Let’s figure out ways to not give these insurance Ponzi schemes our money.
WTF does supply chain issues have to do with insurance? A shortage of envelopes to mail out the premiums?
Supply chain issues drive up the replacement cost of the buildings as it drives up the cost of construction.
Which is already reflected in the inflationary value of the property and stated separately in their reasoning.
The less reinsurance companies willing to work in the Caribbean means that they can charge way higher prices to the insurance companies based here.
yet my insurers refuse to use the 2018 survey, showing my property is average 22ft above sea level, and continue to use the older survey done before the lot was subdivided, which make the old lot average height 8ft. so im paying a premium based on a risk of storm surge affecting unused land I don’t own.
Doubtful. It only matters how high your house is.
the lowest point of the structure is 17ft, highest point 21ft.
house is on a ridge. the rest of the old lot is down the hill, and inland at 4ft. That land is no longer part of my lot, yet my paperwork shows an average height that’s less than the lowest point on this lot.
Simply get a fresh insurance valuation and stipulate that the valuer sets forth the elevation above MSL at the building perimeter.
Let us know which company this is so we don’t use them.
Now your Government Caymanians has found all the time in the world to push national ID bullshit, but tell me when you hear from them on this Robbery
facts are they don’t care about us! Tackling issues such as this will improve people,s lives not some bullshit national ID that will lead to greater of people!!
Thank god they’re doing something about this climate change. 30% will definitely do it now.
I’ve always said the most legal, illegal thiebes
are insurance companies and thats a proven fact and I hope a lot more of them go out of business.
Banks too.
Great, be careful what you blindly wish for. Less insurance companies and banks (post below) means less competition and even higher costs. You really need to think more logically, there are other options.
CIG please help us! Not by paying our bills but by negotiating on our behalf. For example instead of a general increase may the increases fall in the risky areas on the coastline developments. Leave inland rates alone.
Inland Savannah/Newlands (down the gulley) more likely to flood than my coastal property at beach bay
Why would government pick-up the cost for the uninsured? If they do, what is the point in buying insurance?
ohhhhh yes, let’s keep taking advantage of unaffected areas. so sicking.
Insurance is a risk business with no risks. The CI gov would kill these vultures if they offered not for profit insurance.
So if we had experienced a minor tsunami and/or earthquake plus a couple of Category 3 hurricanes our rates would have gone uo 200%. In the absence of all these they are letting us off with a mere 30%!. Can our insurance companies back up their hardship claims by publishing their profits over the last 3 years, I wager not.
I have self insured for the last 25 years and saved a fortune by not encouraging these money grabbers.
Watch for the convenient groupings incorporating risk and geography supporting hike….bunch of parasites.
Rolling the dice, I hope you are better than Mother Nature…
I’m not insuring then. The government will have to pick up the repair tab if any disasters strike.
It can be part of the welfare state PPM and PACT have created while filling their pockets. Thanks Sir SelloutAlot!
6.58pm UDP started it all.
Freeloader! So typical in Cayman.
@5:43- I hear a lot of entitlement in your statement.
Where do you get that mentality from?
History.
i am a native….dont need put insurance on my house..but put some anyways…saw this coming from years ago..so i went tiny home..big living…it works caymanians! but for many it may be too late to downsize….
The fact that you said “I am a native” clearly points towards the opposite.
yes I agree all the homeowners with these big houses that not necessary to have, Sorry for them.
More blantant profiteering and blaming it on inflation.
Bought my house in January and took over the buildings policy of seller. In May the insurance company insisted I get an updated rebuild valuation before they would continue my insurance. Was valued at twice as much to rebuild as I had paid to buy it a few months earlier. Insurance doubled. Plus I was charged $1400 for the valuation. Premium was 2% of the home and lands value.
Add in the 11% excess I’d have to pay in the event of damage (based on the value of twice what it costs to buy), and that is 22% of the value of my home I’d be responsible for despite having insurance!
And now another massive increase too?
This is some kind of cartel BS going on now.
Sorry but your post is ridiculous.
If you paid $1,400 for a valuation that’s on you. Most QS companies do it for less than half that price. An insurance company can’t make you get one. It’s best you do. But shop around for god’s sake.
You don’t insure land. In fact you can’t. It isn’t insurable.
What you paid for the property is irrelevant when it comes to insurance. It’s replacement cost as that is what the insurance company would pay in the event of a loss.
The excess for a hurricane loss in Cayman is 3%. Not 22%. For other perils it’s like $500.
Suggest you get a broker to represent you. You obviously aren’t capable of arranging insurance for yourself.
Excellent points, but sadly logic is lost on many.
most legal illegal businesses are insurance companies and I hope a lot more go out of business like in Florida. They been making a Killing for years now.
Did you get you business degree in a Cheerios box? If insurance companies start going under do you think rates at the surviving firms will go up or down?
mmm you know what happens when there is a lot less competition in a market?